MONTEREY PARK — A judge has ruled in favor of Monterey Park and against a developer who challenged the voter-imposed limit on how many housing units may be built in the city each year.

Los Angeles Superior Court Judge Paul Turner said the developer, before filing suit, had failed to take all steps possible at the local level to gain approval for a subdivision of 101 single-family homes on 30 hillside acres west of Atlantic Boulevard, one of the last undeveloped areas in the city.

The developer, Monterey Views, had waged a five-year legal battle against the housing cap, Proposition K, which voters enacted in 1982. It limits construction of new housing to 100 units a year.

Lawyers said the case was one of only a handful that have gone to trial over the issue of what conditions must be present for a California city to enact a slow-growth ordinance.

Challenge Unresolved

And although the judge ruled Friday in favor of the city, he did not resolve the developer's constitutional challenge to the housing construction limit.

In addition, the judge said testimony had led him to conclude that "there are no serious development problems in the community" and that "the only part of the city where there were problems with overcrowding were in the northeast."

Proposition K was enacted after a slow-growth campaign that asserted that the city was suffering from extreme overcrowding and overdevelopment.

The ordinance, which expires in 1992, allows annual construction of 80 units in condominium or apartment projects of four units or more, as well as 20 units of single-family homes, duplexes or triplexes.

"We view (the judge's decision) as a successful resolution of a lawsuit," said Thomas Winfield, an attorney representing the city. "Hopefully, we can put it all behind us."

The developer has not decided whether to appeal, said Mark Jabin, a Monterey Park attorney who is a principal partner in Monterey Views.

"We're certainly disappointed that we lost this round," Jabin said. "But it's only one round. I don't think this (issue) is going to go away, even in 1992.

"Housing and the slow-growth or no-growth movement are very, very dynamic in California. The situation is probably going to get worse before it gets better."

Jabin contended that the court decision "supports our opinions, but we were shot down on a technicality."

In his eight-page decision, Turner said the developer had failed to ask the City Council whether the subdivision could be built.

The judge noted that under Proposition K, the council, by a four-fifths vote, could have lifted the restrictions that might have prohibited the development. Because the council never took a formal vote on the Monterey Views project, Turner said, he could not consider the legal merits of Proposition K.

The developer remains "free to request that the City Council issue sufficient allotments to allow the project to proceed or to amend the system so that the homes can be built," the judge's opinion said. After that, he said, if the developers are still dissatisfied, they may return to court.

Jabin had argued that under the current allotment system, Monterey Views would have had to be built piecemeal and therefore could not have obtained the bank financing it needed.

"We feel it would have been a waste of time to ask the City Council to change a law that it had already adopted," he said.

Councilwoman Betty Couch, who was active in the Proposition K campaign before she was elected to the council, said she was ecstatic about the ruling.

"When the city manager called to tell me the news this morning, I just jumped for joy," said Couch, a member of the Residents Assn. of Monterey Park. The group has long opposed development on the Monterey Views site, where a condominium project was proposed before the single-family project.

Suit Dismissed

First heard in 1985, the suit was dismissed by another Superior Court judge. But the state Court of Appeal determined that Monterey Views was entitled to a trial to determine the constitutionality of the housing cap and the degree to which the city was required to consider the law's impact on surrounding communities.

Last spring, Turner presided over the Superior Court trial that lasted two months and featured testimony by many past city officials and experts on land use.